How I Built This with Guy Raz - Minted: Mariam Naficy

Episode Date: June 4, 2018

In 2000, Mariam Naficy sold her first company, an online cosmetics store called Eve.com, for $110 million. Several years later, she got the entrepreneurial itch once again: she founded Minted, an online stationery store that solicits designs from artists all over the world. Today Minted is one of the biggest crowdsourcing platforms on the Internet. PLUS for our postscript, "How You Built That," how Vanessa and Casey White turned their grandfather's pierogi recipe into Jaju Pierogi. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

This podcast is brought to you by Squarespace. I talk to entrepreneurs all the time who are looking for a way to upgrade their digital footprint. Well, whether you're just starting out or you're scaling your business, Squarespace is the easiest way to build a great website that stands out. It's an all-in-one website platform that gives you everything you need to claim your domain, showcase your products, and get paid. Anyone can use Squarespace's cutting-edge design tools to build an online presence that truly reflects what makes your business special.

There are templates, intuitive drag-and-drop editing, and even an AI-enhanced website builder. Then, Squarespace's built-in analytics tools help you make smarter business decisions. Review website traffic, learn where to focus engagement, and track revenue all in one place. Looking to grow your business, Squarespace even offers fast, easy business financing

through Squarespace capital. Go to Squarespace.com slash built for a free trial. And when you're ready to launch, use offer code built to save 10% off your first purchase of a website or domain. Loans issued by Celtic Bank and serviced by Stripe, all loans subject to credit approval. This show is in partnership with Airbnb. This past summer, I took my family to Vienna, and it was incredible. We spent our days wandering the old streets, stopping for coffee and pastries, visiting museums, and just soaking up the history of one of the most beautiful cities in the world. And one of the things that made the trip so special was the home we booked on Airbnb. It had tall windows, beautiful old details, and plenty of space for all of us. And being in that home on Airbnb, right in the middle of Vienna, walking distance from so much of the city,

made it feel less like a visit and more like we were actually living there. Plus, taking a trip is the perfect time to host your space on Airbnb. Your place with all of its personal touches and its amazing location could make someone else's vacation even better. Your home might be worth more than you think. Find out how much at Airbnb.ca.com slash host. Hey, really quick before we start the show, I want to let you know about a new addition to our already amazing lineup for the How I Built This Summit in October, sponsored by American Express. Eric Ryan and Adam Lowry, the founders of method cleaning products, will be joining me for conversations on the main stage, along with founders of companies like Airbnb, Stitch Fix, Lyft, and many others. You can get your tickets and see the full list at npr.org slash summit. So April 2008, you launched Minted and you're like, the doors open, the shingles out, you're excited, you pop the champagne corks, and...

Nothing. Nothing. Absolute, dead silence. No orders. There was not a sale to be had. It was terrifying and horrible, horrible. And we almost, I really contemplated that moment, this is a failure. We need to shut this business down. We need to give whatever remains of the money back to investors because it's a total failure. From NPR, it's how I built this.

A show about innovators, entrepreneurs, idealists, and the stories behind the movements they built. I'm Guy Raz, and on today's show how Merriam Nefisi turned her online stationary story. into one of the biggest platforms for emerging artists on the internet, and in the process, transform the business of personalized stationary. Back at the end of the 1980s, at age 13, I was getting ready to officially become a man. This is the age of which, according to Jewish tradition, boys enter manhood and they have a bar mitzvah.

There's a big party. You get hoisted up on a chair and paraded around a dance floor. You serve salmon or chicken. You get the idea. Anyway, about eight or nine months before the big day, I remember going with my mom to a stationary store to look at tons of invitation samples. We checked out fonts, paper stock, colors. We ended up going with burgundy black and gold. She put down a deposit.

It was a long process. Now, compare that to when my son was born 25 years later. I went online, I uploaded a photo of his pink little face. I picked the layout, uploaded my address book, put it. in my credit card details and bam, within like three days, everyone on my list received a beautiful birth announcement in the mail. So thank you, internet. Now, this is the revolution Miriam Nefisi tapped into in 2007 when she launched Minted. But what differentiates Minted is a major pivot Miriam would make early on, because instead of just selling personalized holiday

cards or wedding invitations, Miriam actually built a platform for artists to showcase their work. And she did this by tapping into another revolution that was happening in the early 2000s, crowdsourcing. But before Minted was even a thought in Miriam's mind. She had ridden the dot-com wave of the late 90s with a company called Eve. Eve was a website that sold cosmetics. And at a very young age, Miriam and her partner managed to sell it before the dot-com bust. And the thing about Merriam is that despite launching two successful companies, she never intended to become an entrepreneur. Mariam grew up in Tehran.

Her mom was an artist originally from China. Her dad was an economist from Iran. And toward the end of the 1970s, as the situation in Iran became more volatile, the family decided to pack up and flee. You know, the environment was unstable and we did not, you know, it was very, and clear what was going to happen, I think that we were really worried about what would happen to us in the new regime. So, you know, I guess my dad thinks of us as refugees, which is when you leave unwillingly. When we got here, it was the, you know, soon after we arrived, the hostage crisis started. Yeah. And that was not a great time to be Iranian in the U.S. and being a kid in school, that was

really difficult. I basically really honestly tried to Americanize and fit in as fast as I possibly could. I really wanted to integrate. And when I came here, I actually had a pretty, I had a strong accent. I was two years younger than everybody in my class all the way through, basically school. I was two years younger, so I was small, small, young, and foreign. And I just, I really wanted to be American. And honestly, I sort of feel like the whole time, even when I was in Iran, I felt like a little bit of a, you know, an outsider there as well. So you're always, if you're like me and you're, you're, you're move around a lot and you're of mixed cultures, you're never really going to feel like you belong to one place or one culture, right? You're always going to feel a little bit like the outsider

who's traveling through time and space as an observer. Were you a pretty good student as a kid? I was. I was, I was that nerdy girl who sat at the front of the class with glasses on, who everybody wanted to get help from with their homework. Quiet? I would say quiet and pretty competitive. Very competitive, yeah. And I mean, as a kid, did you have any real interest in, like, business or entrepreneurial stuff? No, my parents, I come from a completely non-business family.

And honestly, you know, with the Iranian upper class, you know, you didn't, they didn't set up business as sort of the vaunted thing that one goes into. Things that were in my family very admired were things like being a doctor, going into foreign service in the government, for example. So when I was growing up in Chevy Chase, not once did business cross my mind. I was thinking law. And I do remember my mom on the first day of first grade sort of bending down to say to me something. And she said, I want you to go to school and I want you to beat all of the boys. So you eventually went on to Williams College in Massachusetts. What did you do after you graduated?

So that's where I did do the expected thing. Some of my fellow classmates who were in economics and Polly SIE were interviewing for jobs on Wall Street and in management consulting firms. And those firms had these huge processes on campus recruiting processes. So I just, so I went to Goldman Sachs. as a financial analyst in their investment banking division. And you loved it. I can't say that I love being a financial analyst. It is sort of like loving boot camp.

I don't know if you're familiar with it, but you end up working very, very long hours. But I will say it's a great training ground as to what work ethic really means because you can't imagine working harder than what you actually physically pull off as a financial analyst. You were like 22 or 21 and you probably moving to New York and all you were doing was working. All I was doing was working.

So I was 20 and I was eating breakfast, lunch and dinner at the office. And I was actually selling, I had a desk on the bond trading floor. And I was selling bonds as well as working with clients. So before I could actually drink, I was selling bonds. So before I could drink legally. So I guess you were doing this for a couple of years. And then at a certain point, you decided to go to business. School. Were you thinking in your mind like, okay, I'm going to go to business school and then I'm going to start a business?

So what happened was I at first was just thinking about going to business school because I'd actually done investment banking and management consulting. And I thought perhaps I would want to go into consumer products or retail. But I didn't get into Stanford the first time I applied for business school. And so I decided to take your off and try to boost my. resume with something that was a little bit more differentiated and went to work for an entrepreneur, Maurice Wardigar, in the restaurant business, actually, who was a Stanford grad, and he became a key mentor to me. He was starting a chain of restaurants in Palo Alto and all over California. But I was so inspired and bitten with the entrepreneurial bug during that

experience. And Maurice importantly said to me, you really, you really could do this. You could start a company, I think you should really consider it. Because we would spend hours talking about entrepreneurial ideas, venture capital, and just becoming completely obsessed to the point where I thought, why go to business school? A real entrepreneur doesn't go to business school. I'm not even interested anymore. And at that point, I thought, all right, I'll apply one more time because my boyfriend, who became my husband, was applying. I thought, all right, I'll throw my hat in the ring one more time, and then Stanford accepted me. So you go to business school. By the way, I read that you, while at business school. You published a book called, I'm going to read the title of this book called The Fast Track,

the Insiders Guide to Winning Jobs and Management, Consulting, Investment, Banking, and Securities Trading, a book that has sold like 50,000 copies. That's very precocious. I mean, that's like super, like, that is, it's like overdrive precocious. Yeah, so the reason I did that was I thought, well, one, it's a market need. Yeah. I know how to fill this need. I have done so much recruiting at the two firms I was working at that I knew that there was a, need for the book. And I wanted to experiment to see what would happen if you create a consumer product that you know that there's a need for. Can I actually put a product together and sell it? And I also thought it would be a good project to demonstrate that I had some, I guess,

Hutzpah, to be able to get into Stanford. So I sold the book, right, and then I knew I'd sold the book to a publisher Broadway before I, as I was applying, and I think that helped differentiate me as well. And then I used the advance to pay for business school, which I needed to pay for. Yeah. So it was a way to pay for school. So at Stanford, did you actually have a business plan or idea that you wanted to put together? Well, I started in the second half of the year. So first of all, second half of the year at Stanford, I was taking every entrepreneurial class I could and trying desperately to get into the best classes.

I was auditing some, sitting on the floor of others, and then working on plans. And one thing I knew that I wanted to do is find a partner that I really liked. So I called a friend of mine in New York. and tried to convince her to come to San Francisco and start something with me. And we had two ideas. And she said, well, I'll start a company if we pursue my idea, which is selling cosmetics online. And mine was to do market research online, sort of like a survey monkey. What was her name?

Varsha Rao. And so we decided to pursue cosmetics because I thought, sure, why not? I want to work with you and I need to convince you to come out. So let's work on cosmetics. I've used cosmetics before. We can figure this out. And so I convinced her to move out. To come to San Francisco to help you start an online cosmetics company.

Yeah. And she slept on the couch in our studio apartment, or our one-bedroom apartment. And in the morning, we'd get up in our pajamas so we wouldn't wake up my now husband. And we'd sit on the couch and call all the New York cosmetics companies from our couch in our pajamas and convince people. to sign on with us to distribute on this thing called the internet, which most of people were extremely suspicious of. So that was an adventure. So the business was going to be just an online store selling all kinds of cosmetics, every different brand. That was the idea?

That's right. So the idea was to create a replenishment brand for cosmetics. We thought skincare, meaning things that you want to replenish, skin care, hair care, you know your favorite and you just want to replenish it. Because at that point, everybody was telling us, nobody was going to buy cosmetics online that they'd never tried. Yeah. And moreover, women don't shop online. Right. That's a fact.

Yes. Women don't shop online and nobody will ever buy makeup online. And I'll just say in my career that has happened repeatedly, right, where people will say, no one's going to buy paper online. Yeah. Who's going to buy that? No one's going to buy shoes online. No one is going to do this.

No one is going to do that. Glasses? No one's going to buy that online. Yeah. So, I mean, if you hear that as an entrepreneur, you've got to discount that massively because trust me, it's been everything. All of those. things have been set. So when you approach these small brands, did it even, why didn't any of them just say, well, we'll just sell them online ourselves? Why were they attracted to what you guys were offering them? Well, in those days, there was no, you know, solution that would easily allow a small brand to actually sell online. I know it sounds crazy, but there was no solution. And so, first of all, nobody wanted to sell online. We would have to go in there and convince them that the internet was not bad. We also actually hired a, a, a woman from Macy's, who was formerly from at Macy's as a big manager of the cosmetics business,

and she ended up being our river guide, making introductions for us, helping advise us. You know, if you go to Chanel, wear the Chanel Nel polish, for example. That one stood out. They'll recognize their colors on you. So you and Varsha, and by the way, what's your husband's name? Michael. Michael. Michael, okay.

So you Varsha and Michael are living in this apartment. you and Varsha decide you are going to start an online cosmetics store, which today doesn't sound like that big of a deal, but I guess in 1998 that was kind of revolutionary. Right. Nobody was selling cosmetics online. Nobody. Can you believe literally no one? Insane.

Yeah. I wish I had a time machine. I could go back and start a cosmetics company. Yeah. And then, you know, to start a company, you know, I basically took a white sheet of paper out and started drawing a website on a white sheet of paper in my computer. kitchen, along with another sheet of paper where I was trying to come up with metrics as to what I would call different things like people coming to your site and what would you call the metric

where someone converts into a customer? And everything had to be invented literally for the first time. Then we went through a really insane year. So I graduated in 1998. We immediately started fundraising. But was it easy to raise money in 1998? 1998, it was getting pretty easy. 1999 was crazy. Just because it was the dot-com boom. It was starting to boom. Yeah, it wasn't the height, but it was getting there.

And I sensed that there was an opportunity for me to get capital even though I was 27 and had no work experience, really. And people liked your pitch. They loved our pitch. They loved us and they loved our pitch. And we had a lot of interest. And we ended up in an interesting situation. where we did experience some collusion, actually. This was a really difficult part of that journey,

where in the old days, you could have VC firms gang up. If they could find out who else you were talking to, they could collude and basically work with each other and partner together to drive your price down, your valuation down. And I had heard about it at business school in a lecture, and sure enough, it happened to me. So we had a couple term sheets come in for our first round, of financing, and it was Idealab plus a couple of others.

But two of the firms decided, first they found out about who we were talking to, and they decided to collude. So we signed a term sheet with one player, and they were valuing us straight out of the blocks just as people, and with this PowerPoint presentation, at $6 million. Right. Which sounds pretty good, right? Yes, it was fantastic. We were very happy.

It was a prestigious firm. They had an office on Sand Hill Road. but they turned around and actually decided to partner with another firm, and they called us and said, we're sorry, this is now their deal. The terms are changing. And the terms now became, we need you to move cities to where this other firm is. We're going to bring the valuation down to $4 million. And it was a collusion, like a textbook collusion.

Hold on. This is like Darth Vader territory. Like the terms have changed. Just explain to me how that worked. how that was like allowed to happen. Yeah. So it's a term sheet is, unfortunately, not binding. It's a indication of interest that's really a buildup of good faith.

And so you could do it and get away with it. Absolutely. And it happened a lot in, you know, in the late 90s when you didn't have online transparency and reputation where other entrepreneurs could learn about what people were doing to you. And so there was no consequence. And so you could become as an investor, much more. more abusive. So what did you tell him when they said that? They said there's four million bucks and here you go. So what's fascinating is we had not yet called Bill Gross to tell him that

we were turning him down. Bill Gross was the guy who at IDEA Lab in Pasadena. So we had had this third term sheet and we were planning to call him, but we just didn't have the time. We hadn't had the time to call him. So instead of calling him to turn him down, we put the phone down with the other group, we picked the phone up, we called Bill Gross and we said, we're signing your term sheet. We'll be in Pasadena tomorrow morning. And we exited the side door. Okay. So you raised some money. It's 98. How long between the time that you went to investors received money and you actually launched the website? We took the money in 1998 and we launched in July 1999. And what described, by the way, we should mention what the name of the website was? I'm sorry. The name was eave.com. And

Like Adam, but Eve? And Eve, yes. So when you launched Eve.com, did people find Adamat right away? How did people even know where to go and how to look for it? Yep. So we ended up with a massive amount of press coverage. And we actually had a lot of money for marketing. And we were encouraged to spend it.

Because at that time, it was land grab time. Everybody was trying to grab market share as fast as they could. We launched in, and there were four competitors who launched right behind us. And one of the big things I learned to do was just completely, completely block out any fear or notion of the competitors. Keep your head down. And so the minute we open the doors, literally the product started selling ridiculously quickly. Wow.

I mean, we did $10 million in sales in our first year. Amazing. Yeah. It was a runaway year given that it was our first year of business. That must just been amazing. You were so young and you were like huge. But we were, lest anyone be confused here, we were working until 10 o'clock at night every night in the office. This is where the investment banking background came in handy because we were trained to operate like that.

And, you know, my husband would come meet me at the office at 10 and we'd have dinner at 1030 every night. So you, in 2000, like a year and a half after you launch, you guys get an offer and you sell this company. Eve.com is sold for $110 million. I mean, I don't even want to ask the question why. I mean, it seems obvious. It was a lot of money and a no-brainer, I guess, right? Right. So, you know, this was a time when we were trying to raise a series D, and honestly, the market was starting to get a little skeptical.

You know, when are you going to make a profit? What's going on? And so I start for the first time in that for the 14 to 16-month period, I started realizing that getting the next round was going to be difficult. And we could take have safe harbor for the company inside another company. I thought it would probably be a wise move. and we closed it in April 2000. Two weeks later, the market started crashing. Wow.

So you made it just like by the skin of your teeth? Yeah. We, yes, we had the foot in the door as the door was closing. Do you, were there other people in your position in the industry who maybe didn't have as good timing as you guys did who were, I don't know, maybe resentful of your lack or your foresight? I think there were a lot of cases where people were convinced by investors or convinced themselves to keep going and wait for the public exit. Because clearly at that point, everybody was enamored of the IPO. And I do think people were resentful of us for this and they considered it lucky versus any type of hard work or intuition or anything else. And that was unfortunate because we worked our butts off to build this business.

I mean, we were working, I basically lived at the office during this time. I never left. So we built a pretty good business in a year. It was $10 million in our first year. Yet, yes, people, I think were very resentful that we had sold at the right time. So did you just, like, go to Hawaii and, like, kick it and drink peanut coladas? I did take a year off, and my husband and I traveled around. It's true.

But about two months into it, I was absolutely. miserable. I felt like I was missing out on what was happening. And fundamentally, there was a perception that we got lucky with Eve.com. And I had this feeling that, you know, that saying once you're lucky, twice you're good, I wanted to see if I was actually good or not, you know. And so I think I needed to prove to myself that I could do it again. In just a moment, how Mariam got into the stationary business and almost abandoned it right before stumbling on an idea that would transform the entire industry. Stay with us. You're listening to How I Built This from NPR.

Hey, welcome back to How I Built This from NPR. I'm Guy Raz. So it's 2002, and after a break from work, Merriam Nefisi decides to get back in the game. And it turns out the body shop wants to create an e-commerce division. And so they ask Miriam to run it. But after a few years, working for a big, company, Miriam starts getting that entrepreneurial itch once again. When you have entrepreneurial tendencies, sometimes you'll see something that you can't resist. And I saw a change in what consumers were willing and excited about consuming. And so, for example, bloggers were starting to emerge that were disrupting journalists at really established institutions.

And consumers were willing to read them over those established institutions. And there was great talent coming to the four. And so I was thinking to myself that perhaps in product design, there would be a similar opportunity that you could find talented designers that people would rather buy than the not talented designers. So I started getting really interested in the idea of having design competitions and this idea of crowdsourcing. And so I decided to take stationary, which was an interesting model for me, and mash it up with this kind of experimental idea, which was crowdsourcing. And at that time, if you met a friend at a coffee shop and they said, hey, what are you working on, you would say, I'm working on this business that's going to do what? Like, what would you say? At that point, I would have said we're going to sell stationary online.

Which sounds pretty clear? Yep. And it was one foot back in the old world of just take the brands, consolidate them online and sell them. There was a slightly embarrassing idea I had, which was to run a design competition. around the side and crowdsource designs that weren't available through the established stationary brands. And I was going to do that on the side. In other words, you said, I'm going to have a site that sells stationary, and then on the

side, we're going to run like design competitions. And maybe we can develop stationary based on the winner of that design competition. That's right. I got you. Okay. All right. So the idea was focused around stationary retail, and it had fantastic economics associated with it, good margins.

It was an inherently viral product because your name is on the back of the card, your company name. But the shopping experience offline was pretty archaic. You'd go to a store. There'd be a piece of paper you'd fill out to order some custom cards. They'd have to fax it in to the supplier. It was an archaic slow and really inconvenient process. And I thought, in my opinion, the design could be improved greatly. And that gave me an opening for crowdsourcing on the one hand.

On the other hand, I was a little bit. honestly a little bit risk averse and I thought that I did not want to raise venture capital again because I had had some bumpy experiences in the first in the first go round. So I thought I need to find a business model to apply this idea to that is very, very cash flow positive and doesn't require a lot of cash and I'm going to run it as a cash flow business. In other words, a business that could just self-fund, right, because of the revenue. That's right. Yeah. So you didn't want to have to raise a lot of money, but you still had to raise some money, right, to get this off the ground?

Right. So at this point, I was going to Friends, and because I had successfully sold Eve, they were willing to listen. And so I was actually able to raise a pretty big angel round of $2.5 million, which is big for an angel round. So you decided you weren't even going to go to VCs initially? That's right. At this point, I wanted much more control.

I decided not to have a co-founder from the outset. And so I put the plan together. And what I found was many of my friends were a little bit, they were very, very supportive, incredibly supportive, but they were all a little bit wary of crowdsourcing because it was not a tried and true model at this point. What was tried and true was e-commerce 1.0, which is take all the brand names, put them online,

and provide convenient access online. So that's what I did. I signed up all these stationary brands, and I put them online. And in the background, I hired a coder who was in college in Portland. And I would work at night on the competition structure, which was my real passion, which was to try to crowdsource the content. So you raise about $2.5 million in Angel funding. And you are ready to launch this site, which is going to sell stationary.

By the way, how many people did you hire? Did you bring aboard to help you launch it? To launch Minted, I had virtually no one. There were maybe five of us, something like that. And that's when I raised, I finished the Angel round. We sublet a little bit of space in Jackson Square. And we started with just a few people first year. And who built the website?

How did you do that? So we spent almost all the $2.5 million on an in-house team who came on board, an engineer. And the key challenge was how to render the customization of your stationary online. That wasn't something we could buy off the shelf from anyone. So we had to build it ourselves. In other words, just to be clear, a way to be able to see what your stationary would look like. That's right. So our engineers built a way to see your customized text appear on the screen inside your stationary design,

and that you couldn't buy from any other technology company. So I spent most of the $2.5 million I raised going around, signing up all these exclusives with stationary brands, that you would see at a papyrus store, for example. You see them, they've already gotten distribution. They're well-known wedding brands, stationary brands. I spent most of the time and the money doing that. And then I just couldn't let go of this other thing that was really risky and unproven,

which was to have a design competition. And I really, really wanted to let myself do that, but I just couldn't let myself do it. It was this tear. So at night I worked with a college student who I found on rent a coder, which is embarrassing to admit, and we worked on this at night.

After every one at Minted went home, I would build the competition structure with this guy. And I really wanted to do that full time, but I just didn't let myself. So April 2008, you launched Minted and you're like, the doors open, the shingles out, you're excited, you pop the champagne corks, and... Nothing, nothing, absolute dead silence. No orders. There was not a sale to be had. It was terrifying. horrible, horrible. With Eve, we opened the doors and the makeup was just flying out from day one. I mean, it was this massive amount of sales. Here, there was not one thing sold in the first 30 days, not one sale. And we almost, I really contemplated that moment. This is a failure. We need to shut this business down. We need to give whatever remains of the money back to investors because it's a total failure. Did you at least have like positive buzz around it or anything like that? We had a really negative article from tech.

crunch. What did it say? Terrible idea. This person's failed before. I think that they didn't really even understood that we had, you know, it successfully sold the company for as much money as we did. You mean eave.com? Yes. So they just made some assumptions and had just a terrible, like that was our freshman, our debut. And so what happened was, and this is what was really fascinating when you look back on it, is we just didn't have enough data. And so what happened was we didn't have enough traffic to really assess whether we were successful or not, because no. Nobody knew about us, so nobody was coming. And then when they did come, what they were buying were the, it was a tiny little crowdsource selection that I mentioned to you, that was my little personal secret hobby passion on the side.

Explain how that worked for a moment. Yeah. So when we opened our doors in April, we had our very first design competition for what people call Save the Date cards that people sent out when you're about to get married. And we had very few entries. And I think what would happen is we picked something like 60s. 56 cards out of that competition based on voting. So the way that Minted Works is everything is submitted to us via a design competition. We picked about 66 designs, and we launched those.

But we had hundreds, if not actually really thousands of skews that we were carrying from established stationary brands that we launched at the same time. That already said save the date. That already said the save the date or wedding. It was all sorts of things, wedding invitations, other things that people provide. and we launched all of that stationary, wedding stationary product online, and then just our little tiny collection of 66 crowdsource Save the Day Cards. What was really different is that immediately the submissions that were coming in were breaking a lot of barriers and a lot of molds that had been assumed about that category of product.

For example, people started putting photos on them. And I remember our printer who we signed up to do this tiny little bit of business said to us, you know what, in our industry, people don't put photos on Save the Day cards. Mariam, they don't do that. I said, I understand, but that's what's actually being submitted, and that's what's winning. So we're going to sell them. Yeah. So what happened was, within a couple of months, we started getting, let's say, one order a day.

Seriously, one order a day, maybe by June. And then, you know, a month after that, it went to two orders a day, maybe three orders a day. Still nothing to write home about. And you were probably not, you're running out of cash. I can't. Absolutely. Yeah. Our runway at this point is running out our conversion rate, which is a critical metric that e-commerce companies use to determine success with something like 0.1 percent, meaning out of all the people who come, 0.1 percent buy. And that is really, really low.

So you're in trouble. Like, I'm getting nervous. Yes. And we have, you know, a couple hundred thousand dollars left in the bank. But then we started seeing the tiny sign of life. And I thought, well, maybe what I can do is take some capital and at least save this business. just to recoup the initial investment, and that's it. So my good friend and Angel, one of my really good friends, Alex Slusky, called me and said, you know, I'm just getting, he's like, I'm just getting nervous about this market. I think you should take some capital, some institutional capital. And I thought, you know, I feel the same way.

I should get on it. So I went out and I decided to break my own rule and actually raise venture capital. And we raised in, we basically, closed our first institutional round of capital. So that's where we raised a couple million dollars. How were you able to do that? If what you had to show for was a company that was getting no orders, you were losing money quickly. Like, why would a venture capital firm give you cash at that point? That's a great question, guy. Yeah. That's a great question. So the reason why they invested in this was personal reputation. That was it. You know, I delivered one thing successfully

before and this one brave investor from IDG, now Ridge, Ventures Alex Rosen, decided to take a chance on me. And that's it. That's the only reason. And nobody else was interested. Do you think I don't want to put you in an uncomfortable position, Marian, but do you think that, I'm going to do it anyway? It's like that, for the way I frame that question, do you think if you would have been a man, there'd been no doubt? Oh, yeah, stationary sounds great. Here's the money. I think that if I were a man, I would probably have gotten a little bit more credit for what I had previously delivered. I think the personal reputation effect of what had happened with E would have magnified. But I don't think stationary was very, and design was very interesting to a lot of male venture capitalists.

And I don't think that when I say Silicon Valley doesn't have design confidence. I mean the investors in Silicon Valley don't really understand. understand design and why it's important. So when you, so explain the business model. I mean, obviously you were selling all of the stationary from other brands. And so you would get a cut of that and that would fund your business. That would bring in revenue. But also you had this crowdsourced these competitions from designers.

And then how would that work? Like they would, their designs would be printed by you guys and then they would. get a cut of that? Well, the way it worked back then was that we had the stationary brands who were basically in a wholesale relationship with, we would take the product and resell it and earn a cut. And we had the crowdsourced side where designers would submit and they would receive a couple things. So first of all, they would receive peer critique and feedback from their peers. We built in a critique phase into the process, which was a benefit. And second, if they won, they would receive an upfront cash prize that was completely at our risk.

meaning if the product never sold, they could still keep the cash. And then on top of that, if the product sold, they would receive a percentage of every sale. And so that's how the business model launched, but because the only thing that sold was the crowdsourced product and not what we spent the entire year launching, which was all the stationary brands, we actually made a hard cut over. And by Christmas of that year, we went 100% crowdsourcing. Wow. And so we turned it around.

we actually decided to move into the holiday cards business against the advice of all of our investors who probably rightly said you should focus on what you started, which was wedding. We decided to ignore the advice, launch into holiday cards, and we had an exceptional first Christmas. I mean, we were so oversold. It was, we had to actually shut off our marketing, our search marketing at one point because we were getting too many orders. So that's when the company went through a huge increase. in sales. So at what point did you decide to drop selling other stationary brands?

Yeah. So that was really rough because I had gone and sold, minted as a partner to all of these stationary brands and I felt very ethically bound. Like, you know, I've made a commitment. I've explained why we brought them on. And now instead this crowdsourced design coming from unknown designers from all over the country is just taking off. And I felt very, uncomfortable. And I was lingering in that discomfort for many months. It took me at least nine months to say, we've got to cut and run, we're going to lose all the money we put into those, building out those brands on our site. We've got to just cut that and shed all of that work, all that money, and all those relationships. And we need to completely pivot towards a crowdsourced model 100%.

I'm assuming you had a lot of tough conversations with your partners. I did. But I think also they understood why, Why tie themselves up selling online at Minted if that's just not what's working and the sales aren't happening? In the meantime, we couldn't print fast enough the work of the emerging designers who the customers themselves were picking. So as you started to gain traction those first few years, did any, I mean, did any competitors try to go after you? Yes. So it's 2013. we have two printers who handle all of our holiday card orders.

One does 50%. The other one does another 50%. The first week of October, my cell phone rings at about 5 o'clock. It's the CEO of a much, much larger competitor. And they basically say, we want you to hear the news from us. We have bought this printing company of yours that you use this 50% player.

And we'd love to talk to you about, how we could continue supplying you with printing services through the holiday season. Now, this is, mind you two weeks from the start of the holiday season when all of the, you know what, hits the fan, meaning you have to be prepared. You're spending, you know, 10 months of the year preparing for this moment because the seasonality is so high for holiday cards. And basically he said, you know, can you come in next week to talk to me and invited me in, I think, for like a six o'clock meeting, you know, the following week. So I went in for the meeting and after a little bit of chatter, he said, we'd like to buy you. We'd like to buy your business. And I realized in that moment that that whole thing had been constructed to basically force us to sell our business.

They basically bought that printing facility knowing that you guys would be like in a corner, back to the corner. That's right. So what did you do when he said we want to buy you? I mean, I mean, you had to entertain. Well, I was in his office kind of stuck there. So I had to say something. So what I basically said was, well, let's talk about it. Let's how, you know, how would this work?

And I thought, in the meantime, God, I cannot. I got to get out of this meeting right now and call my head of supply chain. So he can end the engineering team so they can start working on this immediately. Like, you know, I left the meeting and I called everybody. The team was waiting. And we had a conversation. And they were racing around the country, try to find printers who would work with us. Did a part of you think that you might actually have to sell?

No. I never feared that we would have to sell. Not once. I knew we would find a way around it. I just, there's just no way I would let that happen. So what did you do? I mean, where did you go? So we found another two printers who were gracious and enough to take us on.

And we call, still inside the company, it's called Printergetten at Minted. because the amount of work and hell our people went through to do that integration at top speed was dreadful. I bet. Yeah. And to this day, that has left a taste in those people's mouths, you know, around this potential competitor that I think is still there, you know. And at that time, I mean, when they were going after you, I mean, there were other companies who were doing what you were doing, right? There were companies doing custom stationary that you could buy online. That's right.

So the first generation of companies had been around that captivated people just by the sheer fact that they could make custom stationery for you at a decent price, right? That was just, they're almost like an outgrowth of the printing and manufacturing industry, frankly. We came along with real design vision and really tried to change that entirely into a branded, high-end European stationary product with lots of bells and whistles and really changed. the industry. So yes, there were choices, but we felt that design could be better and more exciting. And then as this community, creative community blossomed and developed, we realized that we were a creative community of all kinds of different people, some people who were former lawyers. You know, there's an oil rig worker from Alaska. There's a plumber, a master plumber in New York City who's winning stationary challenges. There are all kinds of people who want to be creative

and who want to earn money creatively. And Minted is a platform. for these people to be seen and discovered. Is Minted a profitable company today? Yes. So we are in the low hundreds of millions of dollars in sales, and we are EBITDA. We're cash flow positive. Are you able to kind of just relax now and know and know that your business is fine?

You will be fine. Can you go on vacation and disassociate yourself from work for a week and not take calls? Like, is that? Or do you still? are you still always thinking about the survival of your company? That's a great question because I think for the first, believe it or not, five or even six years, even longer of the company, there was constant survivability risk, actually. Now I feel differently. I feel like the company, given that it's profitable, given that it's growing so well, it's a great feeling and yes, I can breathe.

this, the paranoid immigrant mentality that I've, I think, grown up with. And then, of course, I've, you know, a couple of crashes of the market. You know, it tends to make you a paranoid person. You tend not to forget any of this. It just, it just stays with you. But yes, I can, I can, guy, go on a vacation for a week and not worry, maybe even two weeks and not worry at all. How much of your success is because of luck versus skill and intelligence and hard work? I think so much of it is luck. I mean, think about what would have happened if I had not been able to leave Iran, right? How many people are in areas around the world where they can't escape what the situation that their governments are creating for them. Think about all those

talented people who won't ever have a chance. And I guess I would say the other thing is just sheer wanting it very badly, right? I mean, there are a lot of people who are smarter than I am. And I think it's just, I really focused on something I'm happily, extremely passionate about and love to think about all the time. And I would say that's luck and passion probably outweigh the raw skills. Maryam Nefisi, founder of Mintid. Mintid's also become one of the biggest crowdsourcing platforms for emerging artists. Tens of thousands of artists submit their work to the site each year,

and only a tiny handful are chosen to have their artwork and designs sold on Minted. Hey, thanks so much for sticking around because it's time now for how you built that. And today's story comes from Lynn, Massachusetts, where two sisters have perfected a family recipe. I make the stuffings. That's Casey White. And I make the dough. And that's her sister, Vanessa. And the dough and the stuffing, they are for pierogis, those Polish dumplings filled with cheese and potatoes, sometimes sausage. Their grandfather used to sell them at the family deli in Western Massachusetts. In middle school, I would go there on Saturdays and help pinch pierogies, and we always had them in our freezer, kind of like our craft macaroni and cheese,

except we just had frozen farrokeys. And when Vanessa and Casey went off to college, their mom would bring them coolers full of pierogies from the deli. And by the time they graduated, they were still eating them, and their friends were too. And sure, they could get parogis at Trader Joe's or wherever, but who wanted those? There wasn't really anyone making parochies like families to make. And we finally said it was one of those ideas where you're like, someone's definitely going to do this. And then we realized after a while that no one was really, maybe we should do it. Maybe they should make pierogies and sell them.

Okay, so at this point, it was 2015, and Vanessa and Casey's grandfather was no longer alive, but he had written all of his recipes out by hand. So they went to the deli, and they got them. We brought them back to my house and caked my table in flour. And so began the parogi making for 10 hours every Sunday. Vanessa would do the dough. It should be not too thick, not too chewy. And Casey would do the fillings.

We started with three flavors. We started with potato and cheese, the pineapple and cheese, and sweet potato caramelized onion. Wait, I do not believe they grow pineapples in Poland. It is very strange. Yes, definitely not something you would find back in the old country, but it actually was one of their grandfather's recipes. Anyway, every weekend, Casey and Vanessa would make the furogies, freeze them, and then sell them at the farmer's market in Melrose, Massachusetts. to our first farmer's market with about 50 boxes and sold out in an hour and realized that there was a market. And one reason they were selling so fast?

I think dumplings are the ultimate comfort food, whether it's ravioli or it's empanadas or it's Asian dumplings. It's a very nostalgic food. So anyway, all that year, Vanessa and Casey would make and sell pierogies on the weekend and then go to their office jobs during the week. But there was a point where we had to go to the next step because we were just making only, you know, we could only make, much in that long 10-hour day. We couldn't grow it unless we kind of took the leap of faith. So we quit our jobs. And after taking that leap, the sisters moved their parogi operation from Vanessa's house

to a commercial kitchen in Gloucester, Massachusetts. They hired a few people to help them make more pierogies. But Vanessa, she is still doing the dough. Stretching it out, running it through the dough sheeter, and then cutting those circles, thousands of circles a day for the rest of the rest of the dough. of our staff to fill and pinch. Vanessa and Casey call their company Jaju Paroogis. Jaju is the Polish word for grandfather.

This month, they're about to open their first storefront in Somerville, Massachusetts. And by the end of the summer, they're hoping to sign a deal that would get their frozen pierogies into major grocery chains across the Northeast. And by the way, that pineapple and cheese stuffing, they no longer make it. Apparently, people don't like pineapple with their cheese. Like we went to Poland a few years back, and neither of us saw pineapple on any menu. If you want to learn more about Jaju Parogi's head to our new podcast page, How I Built This.NPR.org. And of course, if you want to tell us your story, go to build.npr.org.

We love hearing from you. And thanks so much for listening to our show this week. If you want to find out more or hear a previous episode, you can go to how I built this.npr.org. Please also subscribe to our show at Apple Podcasts or wherever you get your podcast. and while you're there, please do give us a review. You can also write to us at hibt at npr.org, and if you want to send a tweet, it's at How I Built This. Our show is produced this week by Ramtin Arablewe,

who also composed the music. Thanks also to Neva Grant, Sanazmesh Kempur, Nur Kutzi, and Jeff Rogers. Our intern is J.C. Howard. I'm Guy Raz. You've been listening to How I Built This from NPR.